Companies say the recession will mean a bigger-than-expected increase in their healthcare costs this year, according to a March survey of more than 400 companies conducted by Mercer. While the consulting firm's annual survey last summer showed employers anticipated health costs would rise about 6% in 2009, in line with the increases over the last few years, companies surveyed in March put the cost hike at 7.4%.
Mercer data going back to 1988 shows health costs often spike at the start of a recession. That reflects a pick-up in utilization, says Beth Umland, head of Mercer's health and benefits research. In fact, 15% of the companies surveyed in March say they're already seeing higher utilization this year, and 22% of bigger companies, which are more likely to monitor utilization, are citing a pick-up. “Employees tend to stock services when they think there's a good chance they're going to lose their job and with it their health insurance,” Umland says, adding that employees participating in COBRA “invariably have higher utilization.”
Given the cost increase this year, companies are working on ways to implement savings next year. Forty-seven percent say they expect to increase the percentage of the health plan premium that employees must contribute next year. Another 31% say they plan to introduce contribution-based incentives and 22% plan to introduce a consumer-driven or high-deductible health plan for the first time.
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